Design practices to deliver business value

Companies like Amazon, Apple, Netflix, and Tesla have reaped substantial rewards by prioritizing design. Design should be taken as an overarching and holistic approach not just referring to product or services. It is more of an organizational philosophy.

Over the past decade, S&P 500 companies that dedicated significant resources to design processes, capabilities, and leadership, including renowned brands like Disney, Nike, and P&G, outperformed the rest of the index by an impressive 211 percent. That is a lot!

Companies focused on design philosophy demonstrate how that links up with the financial performance of each company, being 2.4X above the market on both revenue and returns to the shareholders.

There are many things in design thinking that contributes on creating value but three of them are fundamental.

1). From departmental silos to cross-functional teams.

Companies with a central, silosed design department generally performed less well financially than those that let designers off the leash and distributed design experts into?cross-functional product-focused teams. This was equally true where design expertise is brought in from external agencies—the business itself is still responsible for integrating these partners into one customer-obsessed development team.

How important is collaboration and how it contributes to performance was excellent described by Barry Liber and Jon Spector in their book “We Are Smarter Than Me”. It encourages readers to harness the collective intelligence of online communities and leverage technology to tap into the wisdom of crowds.

A great example is one major European furniture manufacturer experimented by setting up both a central design department and smaller, independent design teams, embedded within different product groups. It found that the distributed teams were much more successful: they had clearer focus on their customers; better cross-functional partnerships, resulting in 10 percent faster time to launch and a 30 percent higher success rate for getting concepts to market.

2). From narrow experts to interdisciplinary workers.

Whether you are developing a new vehicle, a medical device, or a banking service—physical, digital, and service designs are converging. Companies increasingly recognize that such distinctions aren’t meaningful to customers. As a result, we saw improved financial performance in those companies that broke down barriers and cross-trained employees in skills, compared with those that maintained historical divisions with little cross-fertilization.

I have written here why you need to nurture people development of their T-shape and why is that important for future. Traditional approach on expertise is no longer creating sustainable value so you need to elevate your employees profile by enlarging your horizontal line and support it by acting as an "into people" organization.

3) From top performers to top talents or real value creators

Identifying and defining top talent and critical roles can be challenging, often relying on hierarchy or intuition rather than a systematic approach. Instead, a better approach involves classifying roles as either value creators or enablers and allocating resources accordingly.

In an article published recently the suggestion was to review your talent management programs as it brings you 75% more profit and 40% more resilience in your business.

Unfortunately enablers are often overlooked, but they play a vital role in supporting value creation. It is important to align talent with objectives, considering the specific needs of the organization. Linking value to talent requires developing leadership skills and rigorous performance analytics. Ultimately, prioritizing value-talent over value-performance can lead to better outcomes if executed effectively.

Research shows that relocating of talent are 2.2 times more likely to outperform the competition on returns to shareholders.

As it might be easier for early stage companies to implement and nurture the above, mature ones must keep up with the pace, mainly in identifying and retaining the value creators.